Pace Global

Evaluation and Simulation of an Electric Cooperative’s Existing Hedge Program

Clien Need
Client Need:
The client sought an evaluation of its existing hedge program, looking for recommendations to enhance the program.


Our Role
Our Role:
For an electric cooperative, Pace Global evaluated the design of the firm’s natural gas hedging program and recommended a more structured set of hedging decision protocols to improve the program’s performance. Pace Global performed a rigorous, historical analysis of the cooperative’s deployment of hedges, and advised the firm on deploying Value-at-Risk (VaR) metrics to signal encroachment on risk boundaries to protect against acute price spikes. Pace Global also advised the firm on using technical and fundamental indicators to provide objective, empirical support to identifying favorable price opportunities.


Results
Results:
The client was able to make significant enhancements to its risk management program based on Pace Global’s analysis and simulation work. These enhancements will provide greater mitigation benefits in extreme market price environments.
Pace Global